Amazon.com (AMZN) Showing Signs Of Being A Momo Momentum Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Amazon.com ( AMZN) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Amazon.com as such a stock due to the following factors:

AMZN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $956.0 million.

AMZN has a PE ratio of 1265.6.

AMZN is currently in the upper 30% of its 1-year range.

AMZN is in the upper 25% of its 20-day range.

AMZN is in the upper 35% of its 5-day range.

AMZN is currently trading above yesterday's high.

AMZN has experienced a gap between today's open and yesterday's close of 0.3%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

Amazon.com, Inc. operates as an online retailer in North America and internationally. The company operates in two segments, North America and International. AMZN has a PE ratio of 1265.6. Currently there are 24 analysts that rate Amazon.com a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Amazon.com has been 2.6 million shares per day over the past 30 days. Amazon.com has a market cap of $162.2 billion and is part of the services sector and retail industry. The stock has a beta of 0.60 and a short float of 1.9% with 2.66 days to cover. Shares are up 41.3% year to date as of the close of trading on Tuesday.

TheStreet Quant Ratings rates Amazon.com as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:

The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 23.8%. Growth in the company's revenue appears to have helped boost the earnings per share.

The current debt-to-equity ratio, 0.33, is low and is below the industry average, implying that there has been successful management of debt levels.

Powered by its strong earnings growth of 85.00% and other important driving factors, this stock has surged by 48.04% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.

The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, AMAZON.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.

The gross profit margin for AMAZON.COM INC is currently lower than what is desirable, coming in at 32.53%. Regardless of AMZN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.23% trails the industry average.